Bengaluru: Startups have been raising multiple rounds of capital in quick succession at increasingly higher valuations. Investors are chasing startups that don’t generate any revenue—at least not yet—and market share is the preferred investment metric, not unit economics. Is another hyper-funding wave around the corner for startups?

Increasingly, this year is resembling 2014, when a handful of relatively mature startups raised huge sums. That year was followed by a broader hyper-funding wave in 2015 when it seemed that all you needed to raise cash was a degree from a top engineering college and the word “hyperlocal", which was the flavour of the day then, in your investor pitch.

Investors have already struck 18 deals of $100 million or more this year compared with 22 last year, according to Tracxn data. At least a dozen more such deals including mega funding rounds at Oyo, Byju’s, Swiggy and Zomato, ShareChat, BigBasket and others are in the works, according to previous reports in Mint. Factor in the $16 billion sale of Flipkart to Walmart and it’s clear that this will be the best-ever year for startups in terms of attracting capital, a stark contrast to the weak investment activity in the last two years.

The jury is out on whether this bumper year will be followed by an investment frenzy similar to that of 2015.

But there are some early signs. startups such as Swiggy, Zomato and CureFit are attracting large rounds of cash in quick succession and at soaring valuations. Investors are chasing content startups that have no business model in sight. And, in some sectors such as food ordering, startups are spending wantonly on discounts, advertising and free product deliveries, though still not at the levels seen in 2015.

“While the ecosystem of companies has grown, the number of quality startups in the later stages has not grown at the same pace," said Sharad Sharma, an angel investor and co-founder of iSpirt, an industry group for software products startups. “As a result, investors have fewer mid- to late-stage companies to back and double down on. Other than the category leaders, the ones that have just managed to survive but haven’t really taken off in a big way are also getting funded in the current wave. So, in mid- to late-stage deals, we’re definitely starting to see the beginning of a bubble."

Some investors said VCs and startups had learned from their mistakes in 2014-15 and it is unlikely that a bubble-type scenario would be repeated this time.

“The environment is very different from (that in) 2014-15," said Ritesh Banglani, partner, Stellaris Venture Partners. “First, there is clear evidence of exitability of Indian internet companies. Second, companies that are raising large rounds are mostly market leaders who have proven the benefits of scale. Third, companies like Swiggy and Zomato that are raising big rounds have demonstrated good unit economics. So, most growth-stage funding is going towards building scale rather than proving business models, which was the case in 2014-15."

“Many investors had come in earlier during 2014-15 than they otherwise would, and a lot of sectors got overfunded," Khare said. “Now, the market has matured and you’re seeing one or two winners emerge in several sectors. In India, capital accumulates around the winners pretty quickly, so I would expect more sectors to get funded in the growth rounds than in 2014-15."

In the 2014-15 startup investment boom, Tiger Global made a series of early-stage bets, a move that gave rise to the term, Fear of Missing Out (FOMO), among other investors, who followed Tiger Global’s lead. Both Khare and Banglani said that so far, the FOMO factor isn’t at play. (While Tiger Global has stepped up its investment pace over the past nine months, it is avoiding early-stage firms). “What I would see as a sign of froth would be if international investors were coming in during A rounds and signing $10 million cheques and investing in seven-eight companies in each sector. I don’t see that happening right now," said Khare.